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tv   Nightly Business Report  PBS  March 30, 2011 1:00am-1:30am PDT

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>> susie: capitol hill is bustling again. republicans and democrats are back-- and back to battling over the budget. >> hey, we cut a few billion here and a few billion there, and if we keep on doing this, we will have made some significant reductions in the budget. >> tom: can congress and the white house reach a deal before the latest round of funding for uncle sam expires? you're watching "nightly business report" for tuesday, march 29. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> tom: good evening everyone. susie gharib is off tonight. i'm joined by my colleague suzanne pratt. suzanne, we are just days away from the latest federal government stopgap funding bill running out and the risk of a government shutdown is rising. >> susie: republicans and democrats are back in washington after a weeklong break, and they are getting close to a long-term agreement on spending. >> tom: the current budget blueprint runs out april 8. if there is no deal by then, uncle sam shuts down. pressure is rising on congressional leaders from the left and the right not to cave in to the other side's demands. darren gersh reports. >> reporter: democrats and
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republicans are now just a few billion dollars apart in negotiations over this year's $1 trillion-plus federal budget. but senate majority leader harry reid says agreement hasn't been reached, because republican leaders face a revolt from the right. >> they seem to be afraid to anger a small, extreme minority in their party that's willing to shut down the government, put the economy at risk of killing at least 700,000 jobs. >> reporter: house speaker john boehner says democrats are more serious about politics than deficit reduction. >> today the democrats got their marching orders about how to try to depict us. we've done our work. instead of them issuing marching orders, maybe they should do is get to work and actually pass a plan. >> reporter: both republicans and democrats say they don't want to shut down the government, but that can't be ruled out when government funding runs out on april 8. it is possible congress will keep adding one week or two week extensions of the deadline, trimming spending a few billion
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dollars each time. former republican congressman vin weber says some budget hawks are pleased with the results of that strategy. >> so the people that are arguing for the one-slice-at-a- time strategy have something to say. "hey, we cut a few billion here and a few billion there and if we keep on doing this, we will have made some significant reductions in the budget." >> reporter: the problem, weber says, is that the easy slices are now gone, leaving more politically difficult cuts that may face a presidential veto. and many republicans are refusing to extend government funding unless the package comes with special legislation called riders that strip funding for the implementation of health care, for e.p.a. regulations and for abortion. the center for american progress' michael linden says democrats should push back, forcing republicans to focus on the real fight. >> on the one hand, let's keep it to the budget, let's keep the policy for another debate and let's expand the debate to the whole budget, not just one sliver. >> reporter: the debate over the whole budget may pick up as soon as next week.
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house republicans are preparing to release a budget plan for next year, one that may call for big changes in spending on popular programs like medicare. darren gersh, "nightly business report," washington. >> tom: here are the stories in tonight's n.b.r. newswheel: a smaller-than-expected decline in consumer confidence helped boost investor confidence. the dow rose 81, the nasdaq added 26 and the s&p 500 gained nine. trading volume was light: 804 million shares on the big board, 1.6 billion on the nasdaq. the conference board's index of consumer confidence fell eight points to a reading of 63.4 in march, sparking a pop in consumer-discretionary stocks. but home prices continued to drop, renewing concerns about a double-dip in housing. the s&p case shiller index of home prices fell 3.1% in january to about the same level we saw in 2003. another blow today for two of the euro-zone's most troubled
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member states, portugal and greece. standard & poor's downgraded both, citing worries they'll have to restructure their debt again. and more quality control troubles for the tylenol brand. johnson and johnson's mcneil consumer healthcare unit is recalling tylenol eight-hour caplets after complaints about a musty odor. mcneil has had a string of similar recalls over the past year. >> reporter: this is diane eastabrook. coming up, i'll take you to austin, texas-- a city that's getting charged up over electric vehicles. >> tom: in japan, the owner of the crippled fukushima nuclear power plant, tokyo electric on america's nuclear power growth until new safety guidelines are put in place. in japan, meantime, lucy craft reports the owner of the fukushima power plant may soon be under management, the japanese government.
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>> reporter: reports here say the government may temporarily nationalize tepco, which is confronting tens of billions of dollars in compensation to residents, fishermen and farmers who have been dislocated by the radiation disaster. a government takeover would ensure the company could meet those obligations, analysts say. the complex operation to stabilize fukushima's six damaged and leaking reactors could drag on for weeks. this weekend, trace plutonium turned up on the site, raising more alarm. tepco is the region's largest utility, and provides power to a third of japan's population, but with most of its nuclear power and other energy plants sidelined by the earthquake, tokyo is confronting huge power shortages, especially this summer. the nationalization rumors-- discounted by japanese officials-- sent tepco shares to their lowest level in almost 50 years. the fukushima disaster may not end japan's heavy dependence on nuclear energy, but it's likely to permanently alter the cozy ties between nuclear power companies and their regulators.
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lucy craft, "nightly business report," tokyo. >> susie: happy birthday, starbucks! while the world's biggest coffee chain has been celebrating all month, it officially turns 40 tomorrow. thanks to starbucks, a "half-caf grande dry cap" is now part of our vocabulary. but, three years ago, starbucks was in bad shape. profits were down, so founder howard schulz returned as c.e.o. to save the company. he details that comeback in his new book out today. it's called "onward: how starbucks fought for its life without losing its soul." earlier today, i spoke with schulz and began by asking what others can learn from his story. >> the book really is -- it chronicles the last two years of starbucks' transformation, and also going through the financial crisis. but really, the essence of the book is trying to build shareholder value and at the same time, giving back to the communities we serve and recognizing that you must
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build value for your people, as well as building value for your shareholders. as a result of that, success and profitability will be greater. >> suzanne: and the last time you wrote and published a book, you stepped down from the c.e.o. position a few years later. is that your plan this time? >> no, not at all. starbucks' best days are ahead of us. we had a record year of revenue and profit. i'm more excited than ever, and i'm here for the long-term. i have no intention of stepping down at this time. thank you. >> suzanne: and speaking of those best days and what is ahead for you, you've got a lot of plans, i think, for growth. you just purchased a single server -- or entered into a partner for a single serve coffee, and you've got a lot of plans for expansion into grocery stores. is that where you see the best chance for revenue growth for starbucks? >> i think it is a multiple-pronged strategy. china is our largest prize. we hope to open up in india over the next 12 12
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months. we are transitioning the company to be able to leverage the starbuck's plan into grocery. and starbucks will be the super premium cough on k-cups. and it will give us a lot of growth. >> suzanne: is that a billion dollar business that some people are talking about, do you think? >> we think starbuck's zia will be a billion dollar business, and starbuck's best seattle coffee will be a billion dollar business, and starbuck's and k-cups will be a billion dollar industry. and the international strategy. >> suzanne: you mentioned the international strategy. tell me a little about china. what's ahead? >> we've been in china now for 12 years, so we've really made a significant investment now over a decade. we have 800 stores in greater china. about 400 in the mainland.
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we think there are opportunities for thousands of stores. we have a chinese-based team who really understands local relevancy. we're making money in china. i think over time, it is going to be a very big market for us where we think we can demonstrate that starbucks will be one of the few western retail brands that will be able to transition extremely well, almost seamlessly in china. big, big opportunity there. >> suzanne: i've got to ask you about coffee prices. they've clearly been going up. you can't miss it if you go to the grocery store. is starbucks going to have to raise prices? >> well, i think we've maintained relative pricing in our retail stores. we just raised prices in grocery, though. the reason for that is commodity prices and coffee in particular is at record highs. we hope to see a downturn in the price, but thus far it has stayed up there. we maintained our concern
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over there. and it is going to be a tough road if that continues in 2012. >> suzanne: congratulations on your book? >> thank you very much. >> suzanne: and thank you for joining us. i've been speaking with howard schulz, c.e.o. and founder of starbucks. >> tom: lots more economic data today between consumer confidence and home prices, kind of battling for the soul of the stock market. let's get you update in tonight's "market focus."
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>> tom: stocks saw buying throughout most of the day, shrugging off the bad housing sales data and government debt downgrades in europe. the telecom sector led the market gainers for the second session in a row, and telecom stocks were led by at&t. shares added another 2.4%. volume almost doubled today. this chart shows at&t since the day before its buyout of t- mobile was announced. shares are up about 7%. look at this. longer term, better idea of the trend. here's the past year. with this recent rally, it brings the stock back to its previous high, around $30, and just below a new 52-week high tonight. the new york attorney general came out against at&t's effort to buy t-mobile.
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two other big wireless players-- verizon also saw more buying-- hitting another 52-week high. sprint, though, backed off, losing more than 3%. sprint volume was double its usual pace on this weakness. home depot led the dow industrials, jumping almost 3%. here we go with home depot. the buying brings h-d shares back close to its recent resistance, right around $38 per share. it is picking up the pace of a $1 billion stock buyback plan. that helped the share price. while we're talking about the home improvement business, how about the homebuilding business? homebuilder lennar lost more money than anticipated in its fiscal first quarter. including a legal settlement, lennar was profitable in the quarter. shares saw heavier volume, slipping more than 3%. now revenue from home sales dropped and average sales prices dropped for lennar. about the only bright spot was its investments in distressed real estate loans, which are generating profits. other homebuilders were hurt by
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lennar, and the drop in the case-shiller home price index we reported on earlier. m.d.c., k.b. home and the ryland group lost about 2% each. warner music was hitting some higher notes today-- how about this, a 13% rally on four times its usual volume. highest level we've seen since last spring. a german media report indicates german media company bertelsmann and private equity firm k.k.r. want to buy it. speaking of deals, g.e. is parting with $3.2 billion of its cash for a majority stake in converteam. that's a french company that makes gear to turn mechanical power into electricity. it will be folded into g.e.'s technology arm. g.e. shares gained a fraction. finally, for-profit education. apollo group lost money in its second quarter and enrollment dropped.
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had to tighten admissions policies. shares fell 4%, hurting competitors strayer and corinthian. and that's tonight's "market focus." >> tom: the insider trading case of hedge fund manager raj rajaratnum continued today in a new york federal court room. a former employee testified part of his job was to get revenue figures from company insiders before those numbers became public.
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rajaratnum claims he traded on research, but prosecutors have alleged the biggest insider trading case ever against a hedge fund. but most insider trading is legal, with company executives properly disclosing both buying and selling of their firm's stock. that brings us to tonight's "word on the street," "insider." david peltier is a research manager with david, there is lots of reasons for legal insider selling. usually only one reason for legal insider buying. they think the stock price is going to go up. how accurate is insider buying? >> it's a pretty good barometer. this is one thing i look to when i look to buy a stock. and i want a company that has something to follow. >> tom: so you're looking for insider buying, plus some other features. you brought along two small caps that have seen some recent insider buying. beginning with headwaters. it makes building products like concrete blocks. even though the housing market remains weak, this
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stock has seen some buying and rallying. >> absolutely. the c.f.o. came in and bought about 25,000 shares on the open market. that's in the six figures. and the company had double dil yea year-over-year sales growth. and they're dramatically lowering their debt. >> tom: we're going to take a look at the graphic, showing that the c.e.o. of headwaters doubled that stake, and he also owns 25,000 shares. is this a pretty significant position for a top executive? >> absolutely. you can argue no one is going to know the strength of a company's in its near-term direction better than the c.e.o. or c.f.o. when they put their own money where their mouth is, it is a good sign. >> tom: and spartech, this is a specialty plastics, s.t.h., the ticker symbol. the share price is what, about half of what it was almost a year ago? >> absolutely.
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while headwaters has been up 25% year-to-date, spartech is down 25% year-to-date. there is no sign that the insiders are going to be right. but the fact that the c.e.o. has bought about 36,000 shares on the open market, it is a sign that the stock could be bottoming sooner than later. >> tom: any disclosures, david for these stocks? >> i do not own either one. >> tom: you can read the article, lots more on the the word on the street, our guest david peltier of >> suzanne: here's what we're watching for tomorrow: a.d.p.'s monthly report on private-sector jobs is out. hilary kramer is back as our "street critique" guest. and, we talk about the future of home mortgages with housing and urban development secretary shaun donovan. >> reporter: i'm erika miller. also tomorrow, a look at why adjustable-rate home loans are growing in popularity, again, and whether you should consider one. >> suzanne: the u.s. supreme court heard arguments today in a
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mammoth gender discrimination case against walmart. the justices seemed sympathetic to the giant retailer in considering whether a small group of women can represent a huge nationwide class. walmart is accused of discriminating against female employees by denying promotions and paying them less than men. today, the court questioned whether the alleged treatment was part of a corporate policy. >> tom: the third largest u.s. stock exchange, called bats global markets, wants to compete with its bigger rivals. bats plans to launch a new listings service for u.s. stocks by the end of this year. the move opens the door for u.s. companies to take their shares public somewhere other than the new york stock exchange or nasdaq. bats is based in kansas city and already competes with those better-known exchanges in its trading business.
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>> suzanne: when it comes to banks and the lessons learned from the financial crisis, tonight's commentator says what's old is new again. he's allan sloan, senior editor at large at "fortune." >> it's amazing how much has changed in the past two years. stocks have about doubled from their low. big takeovers and buyouts are back, and so is the whining from giant financial institutions which taxpayers saved by risking trillions of dollars. now that the immediate danger has passed and the government
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has made it clear they won't be allowed to fail, they're trying to stop regulators from reigning them in. i mean, come on. the world financial system almost collapsed because many giant institutions were barely regulated and clueless about what they owned and the loans they had made. the ones that weren't clueless would have gone under if the clueless ones had been allowed to fail. so when you hear today's whining about excessive government regulation, take it with a grain of salt, or a whole barrel, and remember that these institutions are looking out for their own interests-- not yours and mine. i'm allan sloan. >> suzanne: electric vehicles like the chevy volt and nissan leaf are rolling into a handful of u.s. cities. austin, texas is one of them. it's no coincidence general motors picked the city as a launch market for the volt. it has an educated, eco-friendly workforce. diane eastabrook begins a two- part look at how austin hopes to spread the e.v. gospel.
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>> would you like to unplug the car, caleb? >> yeah. >> go for it. >> reporter: mike legatt is a self-described evangelist for electric vehicles. >> i wanted to support this technology because, i mean, it's a great first step. >> reporter: the austin, texas, psychologist got his chevy volt less than two weeks ago. since then, he's been tooling around town and preaching the gospel of this green technology. >> austin has a lot of engineers per capita, and so i've had a lot of people looking under the hood of the car and are very interested in the way the technology works. >> reporter: consumers like legatt make austin perhaps the most significant market for electric vehicles. with big employers like dell, austin has a tech savvy workforce-- the target audience for e.v.s. and even more importantly, this environmentally conscious community wants to lead the charge for electric plug-ins. >> so we're looking at a map of austin, and the red circles give you an idea right now where we're planning to put in
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electric chargers. karl rabago is heading austin energy's efforts to hot-wire the city. the utility is part of a $37 million government program to install public charging stations in nine u.s. cities. it's putting more than 100 chargers in places like arts centers and parks. since there are currently fewer than three dozen electric vehicles in austin, the utility still isn't sure where e.v. owners will need chargers. so, rabago says he's primarily putting them in places potential e.v. buyers might go. >> it's a re-enforcing mechanism that acts as much as marketing as it does a sort of expectation of demand. demand will come later. and the good thing about it is, in many cases, we can move the hardware around if we need to. you know, a charging station can go virtually anywhere we have electric service. >> reporter: big business is also backing the e.v. effort. austin-based whole foods installed one free charging
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station for customers last year, months before plug-ins went on sale. it's being used, and regional marketing director laura zappi says the grocer is considering more. >> we'll take a look at it. right now, we're just seeing it as a community service and part of our operating expenses. >> reporter: and whole foods isn't alone. none of the employees at advanced micro devices lone star campus owns a plug-in yet, but the company thinks some will. >> here is one plug, which is your standard 220 plug. >> reporter: global sustainability manager justin murrill demonstrates one of three charging stations the company has already installed. he calls the chargers e.v. confidence builders. >> one of the common concerns that is coming up for potential e.v. buyers is that their place of employment doesn't offer a charging station, so by having these in early, our employees can count on, they know it's here and they can proceed with considering a purchase. >> reporter: the department of energy will be studying charging data from austin and that could help other cities plan for
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public plug ins. austin thinks its "if we build it, they will come" strategy is working. area chevy dealers all say they have long waiting lists for the volt. austin energy estimates there could be as many as 40,000 electric vehicles cruising the city's streets by the end of the decade. tomorrow, we'll look at what all of those plug-ins could mean to the area's power grid. diane eastabrook, "nightly business report," austin, texas. >> suzanne: that's "nightly business report" for tuesday, march 29. i'm suzanne pratt. good night everyone, and good night to you too, tom. >> tom: good night suzanne. i'm tom hudson. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:
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this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh >> more information about investing is available in "nightly business report's" video. to order this dvd, call 1-800- play-pbs or visit online at >> be more. pbs.
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